A Name You Can’t Trust: The App Store Freedom Act and the Regulations Behind the Words
Lawmakers in Washington seem to have stumbled upon legislative alchemy. If you refer to government intervention as “promoting fairness” and “encouraging competition” then it doesn’t count as meddling in the free market—or does it?
Last week, the U.S. House Energy and Commerce Committee heard the App Store Freedom Act (ASFA), introduced by Congresswoman Kat Cammack (R-FL). The ASFA mandates that Google and Apple change their app store practices to allow third party downloads, known as sideloading, on their products. Additionally, it prevents these businesses from designing their app stores and products to incentivize developers to prefer their platforms. The collection of requirements outlined by the ASFA amounts to a concerted effort to force Google and Apple to make their products worse in order to make the competition more “even” between them and other companies.
The author references principles of innovation and competition in her justification of the bill. Reason Magazine offers a helpful metaphor to show just how far from these principles the reality of the ASFA would be: “To say that Apple and Google should offer payment options besides their native billing systems is like saying department stores should advertise to shoppers at the checkout counter that they can purchase directly from suppliers at a discount—in both cases, suppliers free ride off the downstream firm’s distribution services.”
Last week, the Pelican Institute joined a coalition of 16 free market groups urging Congress to reject this legislation and the broader approach that it represents. The authors of the coalition letter point out the dangers of sideloading to user privacy. In addition to forfeiting the safeguards put in place by Apple and Google to protect the security of their products, the ASFA reduces consumer choice. “Moreover, the bill would reduce consumer choice, not expand it. Consumers who prefer devices that permit sideloading already have options in the marketplace. Users who want these devices can obtain and use them. The ASFA would simply prevent users who seek a higher degree of security from taking advantage of such features.” The language of freedom and choice cannot conceal the undue government intervention inherent to the ASFA, nor the risks that it places upon consumers.
The coalition letter concludes by observing that the ASFA adopts a European approach. Also last week, the Digital Markets Act (DMA), a sweeping regulatory regime in the European Union, was used to justify a $1 billion fine to Google. The DMA picks winners and losers in the name of fairness, with American companies receiving the brunt of its penalties. As a result, European consumers are reporting a worsened experience with technology products and the businesses in Europe are reporting revenue losses. The bureaucratic mess of the DMA has kept innovation and competition at bay in Europe, while driving away the offerings from the world’s best and brightest technologies.
It’s easy to see from a distance how the DMA is punishing American tech and harming multiple facets of European life. American lawmakers can and should take this as a warning, not a formula to replicate. Paying lip service to the free market is not enough to undo the disadvantages of a bill that oversteps and overcorrects.
